New mortgage interest rates at lowest levels since March 2023

Central Bank data shows Ireland has the sixth highest rates in the eurozone

Central Bank data shows that the average interest rate on new Irish mortgage agreements as of the end of October stood at 3.56%. File photo

The average interest rate on a new mortgage has hit the lowest levels since March 2023 after falling marginally in October, the latest data from the Central Bank of Ireland shows.

The weighted average interest rate on new Irish mortgage agreements as of the end of October stood at 3.56% which is down by 0.03 percentage points and down by 0.47 percentage points compared to the same month last year.

According to the Central Bank, this is the lowest the average new mortgage interest rate has been since March 2023 when the rate stood at 3.54%.

At that point in 2023, the European Central Bank (ECB) was in the process of significantly increasing interest rates in order to contain rapidly rising inflation. Between July 2022 and March 2023, the ECB increased interest rates by 3%.

The weighted average interest rate on new fixed rate mortgage agreements in Ireland, which makes up 90% of all new agreements, stood at 3.49% with the average rate on new variable rate mortgage agreements hitting 4.17% — an increase of 0.09 percentage points month-on-month.

Daragh Cassidy of price comparison website Bonkers.ie said the fall in interest rates was expected as recent reductions from PTSB and AIB filtered through into the data.

“Although Irish rates are the sixth highest in the eurozone, the gap between the average rate in Ireland and that of the Eurozone is now relatively modest,” he said.

Ireland now has the sixth highest interest rates in the eurozone with the average new mortgage interest rate across the eurozone being 3.33%. Latvia has the highest average interest rate at 3.96% while Malta has the lowest at 1.96%.

The combined value of all pure new mortgages in October fell to €1.1bn — down €37m year-on-year. Renegotiated mortgages totalled €375m in the month.

In terms of new consumer loans, the weighted average fell by 0.18 percentage points to 7.37% in the month. The combined value of these loans was €253m.

The total outstanding volume of consumer loans with maturity between one year and up to five years was €12bn in October, 9% higher than October 2024, and the greatest volume since December 2011.

Interest rate decision

The Governing Council of the ECB are due to meet again next week to decide on whether interest rates need to be adjusted further. At the moment, it is expected that there will be no change to interest rates at the meeting.

"Looking forward, the average rate might creep a tiny bit lower over the next month or two. But the ECB appears done with cutting interest rates for now. So it’s unlikely mortgage rates will change much more over the coming months,” Mr Cassidy said.

Senior underwriter at Nua Money, Donal Magee, said mortgage holders need to be “mindful” that it's “unlikely there will be any more ECB rate cuts before the end of the year and possibly even during the first half of the New Year”.

“Indeed, the ECB recently hinted that its next move could be a hike,” he said, “it has never been more important for Irish mortgage holders to be proactive about getting the best deal on their mortgage."